The Economics of Soccer and the World Cup

The amount of money that star athletes earn can be staggering. This can be seen in any of the major sports in America – football, basketball, baseball, golf, etc. where athletes earn tens of millions of dollars each year between their salary, bonuses, endorsement deals, apparel, and more.

But what about soccer? It’s never had much of a following in the USA. Salaries in the Major League Soccer League (MLS) are much, much lower than other sports, and so is the fame. As a result, the big time athletes in this country tend to look elsewhere with the hope that their talent will be rewarded by stardom and riches.

This isn’t the case throughout most of the world where people adore soccer (futbol). The star athletes are almost always futbol players. The fans worship them like gods. Children want to be them. Women want to marry them. Entire countries unite to watch them. It’s a miracle!

The difference in popularity among American players and international players can easily be understood when comparing their income earned. International starts have multiple futbol clubs, on multiple continents, wanting to sign them and pay them millions. American soccer stars… not so much.

Perhaps even more shocking is the difference in earned income between some of these international soccer stars and the average wage earner in their respective countries. Most Americans don’t care when an athlete makes $20 million per year, because we’re all pretty wealthy. We all have enough money to eat out and drive big fancy SUVs and vacation. Not so much in other countries.

Portugal star Cristiano Ronaldo earns approximately $44 million per year through his playing salary with Real Madrid and a myriad of endorsement deals. The average Portuguese person earns less than $20k per year.

Lionel Messi earns $41.3 million per year for his efforts, while the average Argentinian earns just $13k per year.

The infographic below, from Neomam Studio, looks at these interesting wealth gaps and also considers the number of houses that could be purchased for the cost of constructing some of the elaborate soccer stadiums that can be found throughout the world.

Do any of these statistics worry you? How do you feel about the income gap between average worker and star athlete?

Should governments spend hundreds of millions of dollars building soccer stadiums? Do these new stadiums provide that much utility for the masses? Are there better uses of that money?

I’m torn on these issues. At the most basic level, it’s all economics. Players are paid what the market dictates. If people love them, and they draw crowds, and they sell products, then they are valuable. Who is to say they shouldn’t be paid $40+ million per year? Clearly the companies and clubs paying them think they are worth it.

On the other hand, there is something a little unsettling about it all. Why is so much value and emphasis placed on sports? Why do governments spend tax dollars subsidizing stadiums when there are people starving on the streets?

Sports are a leisurely activity. The world would continue turning even if the World Cup was canceled. Shouldn’t governments focus more on taking care of citizens and eradicating disease/poverty/economic instability and less on constructing new building for an event that occurs once every 4 years?

I don’t know, but it’s an interested topic nonetheless.

Comments

I’m always a fan of inforgraphics but I really liek the way this one is put together and the points it raises. Overall, I think this is very comparable to the Olympics as well where millions of dollars are spent on facilities in the poorest or more well off countries as well and then are barely used later. I think in regards to soccer facilities these may be more likely to be put to use especially in soccer friendly nations like Brazil. The wage gap is frightening but then again compiling a list of the richest citizens on those countries would also be quite similar.Lauren @ Cheapstudents.ca recently posted…Visiting the Toronto Wine and Spirit Festival

Cheering for Germany at this world cup and watching a great game this morning USA vs Ghana.

However have to concur with John C that public money spending on Stadiums can be seen as inefficient. Especially given where Brazil is at the developing stage of economic development.

The players in the salary comparison plays in a global football market. Astronomical salary but those that are paying the bills are not complaining because they deliver the goods. A global audience and brand recognition.Jason @ SPA ETF recently posted…How Do Index Funds Pay Dividends

I don’t like it when the government spends tax payer dollars on stadiums, I think those should be paid for by the team itself, if they can’t afford it, then oh well. I agree that government should try to get more business to occur, but not through straight up investment, it should be through creating an environment where investment will be encouraged by the private sector.

As far as individual pay for the athletes go, they are the ones doing the work! All of the money that flows in through pay per view, TV deals, jersey sales, seat sales, merchandise, etc… all stems from the work those guys are doing. If you feel their pay is outrageous, then cancel your cable that pays a premium amount to sport channels like ESPN, don’t attend any games, don’t pay for pay per view, and certainly don’t buy any merchandise. Encourage your friends to do the same. The only reason these guys get paid so much is because there is a large demand for their entertainment. I think what they make is crazy, but if there is a demand for it, then the few who do play professionally will certainly get paid well.John C @ Action Economics recently posted…Financial Lessons From My Dad

I agree, it’s just basic economics. People are obsessed with star athletes, so they make a fortune. I think it’s silly, and as a result we’ve personally done all of those things you recommend, including avoiding cable TV.

Sorry for the double post, but I thought of another point. Even if you were to impose a cap on the salaries of athletes, this would not increase the salaries of the average citizen. It would only further stuff the wallets of the fat cats who own the teams.

These wage gaps do not bother me more (or maybe even as much) as the wage gaps between say, the CEO of Nike and the people who actually make the shoes. I am not really appalled by the huge salaries that star athletes command. After all, they are able to make this kind of money for only a few years. They give everything to their sport, and then it is all over. Comparatively speaking, it is a very brief career.

I am not at all a sports fan, so I am not the best at expressing the value of sports. Others have said it much better than I can. But I do believe that sports provide a great deal of utility for the masses, including a sense of unity and a valuable outlet.

The sports obsession by the masses is a whole different argument, but I disagree that it’s always positive thing.
And I don’t think star athletes really have it all too bad. Most of them stay in sports beyond retirement, and continue to make great money. And a 15 year career is a long time when you’re making millions doing something you should love.

Its definitely true that money spent on supporting sports in general, and activities such as the world cup specifically could be used to do a lot of alternative things. I think sports do provide a certain positive force in the lives of individuals who may not otherwise have such a healthy activity to participate in, but excessive spending is clearly irresponsible given some of the poverty in the world today.

I think these figures are shocking! The income gap between athletes and the average citizen’s salary needs to relooked and fixed. We have average hard working citiziens barely making ends meet, yet we spend their tax payer dollard on stadiums and things of that nature. Then, we add insult to injury by paying an outrageous amount of money to the athletes.

I believe this is only going to get worse until someone places a cap salary cap on this nonesense. Sports is great but the financial well-being of our society and future generations must be our top priority, especially above the glaring misuse of money paid to these athletes. Thanks for sharing.Nate @ frugalsoldier recently posted…Frugal Saving Tips for Wedding Party Members

What sort of salary cap should be placed though? Would that solve anything or would the club owners simply profit more? I think a distinction has to be made between international and club soccer. One is often funded publicly and the other is a function of the free markets.

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